The History of Baseball’s Huge Free Agent Contracts

As we pass through another crazy baseball offseason with dollars being thrown around like so many bread crumbs to pigeons, it’s worth taking a look at how baseball has reached this point. How did Ben Zobrist, a utility player with a career .265 batting average, just spur a bidding war and land a four-year deal for $56M? To be fair, he does have more power than, say, Randy Velarde, but even so he’s probably good for a dozen home runs. That’s more than I will hit, but it still doesn’t scream “break the bank.” Every year we’re shocked by the amount of money getting tossed around to baseball’s free agents, and then the following year we get shocked all over again.

Free agency came about in baseball just over four decades ago, just in time for the free market to meet the insatiable appetite of one George M. Steinbrenner III. Mr. Steinbrenner purchased the New York Yankees for ten million dollars in 1973, and a few years later he made Jim “Catfish” Hunter the game’s highest-paid player with a five-year contract worth $3.35M. That was more than triple any other player’s salary at the time and it paid for a lot of Hunter’s mustache grooming. It was also a sign of things to come. Steinbrenner, who was later dubbed “General von Steingrabber” by legendary New York Daily News cartoonist Bill Gallo, wasn’t nearly done yet. He picked up A’s star Reggie Jackson in 1976, paying him $2.96M for five years. That’s just over $12M in today’s dollars but still a tidy sum in that or any era. When Hunter and Jackson became key parts of consecutive World Series winners in 1977 and 1978, it only showed Steinbrenner that showering money on top free agents was a successful technique.

Steinbrenner signed Padres star Dave Winfield in 1980 to a then mind-blowing ten-year contract for $23M. He apparently thought it was actually for less money than that, and the ill feelings from that misunderstanding led to a campaign to publicly humiliate his own employee whenever possible, ultimately leading to a suspension by the late 1980s. That’s a column for another day, but he continued to throw money around to less and less avail. Andy Hawkins, Dave LaPoint, Jack Clark and other free agents became quite wealthy with Steinbrenner’s money while leading the Yankees nowhere in particular, a spell that lasted until the mostly home-grown squad won it all in 1996.

There were big contracts doled out by other teams, as well. Steinbrenner had no direct influence in these, but his presence in driving up the market for everyone helped get Pete Rose a four year deal with the Philadelphia Phillies in 1979 for $3.2M. That same year, Nolan Ryan signed a deal with the Houston Astros for four years and $4.5M, becoming the first player to earn one million dollars annually. He was paid that money while wearing the Astros’ garish Tequila Sunrise uniforms of the era, so he truly did earn the dough. In 1982, slugger George Foster was traded by the Cincinnati Reds to the New York Mets when they couldn’t come to terms on a new contract (he had one year remaining). The Mets were more agreeable and soon Foster was the proud owner of a five-year contract for $10M. He was the first player to earn two million dollars per season.

These salary escalations worried a lot of owners. Some might have had trouble competing with wealthier owners when it came to landing top free agents, but mostly they didn’t want to pay out so much money, so they colluded to keep salaries down. Free agency rules at the time combined with this to cost many players service time, and top players like Tim Raines missed spring training and the first month of the 1986 season. There was all this legal stuff that happened and a settlement from the owners came later. Colluding with competitors, in any industry, remains a no-no.

The market continued to grow post-collusion. In 1991, Kirby Puckett topped $3M a year with the Minnesota Twins, and he was soon followed in that financial stratosphere by Rickey Henderson and two star pitchers of the era: closer Mark Davis (by the Kansas City Royals, of all teams) and Mark Langston (not too long after having been traded for a young Randy Johnson). Roger Clemens and Bobby Bonilla became $5M-a-year players.

The owners again expressed alarm at the money that they themselves were tossing out and pushed back. They knew this time not to collude, so instead they threatened to implement a salary cap. They forced Baseball Commissioner Fay Vincent to resign and replaced him with one of their own to lead the war against the players. Armageddon came in the form of the 1994 strike, the one that cancelled the last six weeks of the season, the playoffs and World Series, and delayed the beginning of the following season. The owners got their wish, kind of, when the salary explosion slowed a little because angry fans stayed away from the ballparks and changed their local TV channels to watch non-baseball programs. The fans gradually (mostly) came back and so did a lot of the money.

Luxury taxes – stand-ins for a salary cap – were implemented, but only the Yankees really paid them. Cable television was a new way to make money from TV rights, and teams in big markets made a fortune. This enabled them to have arms races and gave baseball a large degree of financial stratification. The Yankees, Boston Red Sox and other teams in large markets could grab all the big free agents, while teams like the Oakland A’s, Kansas City Royals and Milwaukee Brewers could only watch helplessly while their young stars perennially left town in search of more money. That was their right, of course, but for years this system helped baseball fans in Boston and New York cheer for annual playoff baseball while their counterparts in Pittsburgh and Cincinnati had little to cheer for. It’s also one reason why the entire 1997 Florida Marlins were disbanded after winning the World Series, the first of many hits to Miami baseball fans’ morale over the years.

It was in this period, in the late 1990s, that Albert Belle left the Cleveland Indians for a new record $10M annual salary with the Chicago White Sox, and that Kevin Brown left the San Diego Padres for a record-breaking $108M with the Los Angeles Dodgers over seven years. It was baseball’s first nine figure contract but it wouldn’t nearly be the last. And incredibly, Brown was already thirty-four by that point.

That brings us, as everything always seems to these days, to Alex Rodriguez. A free agent at a young age, Rodriguez signed a $252M contract over ten years (with an opt-out clause) with the Texas Rangers. To say this was a new record would be to vastly understate the case. He famously opted out in 2007, a few years after getting traded to the Yankees. Steinbrenner was by now mostly out of the picture with illness and infirmity, and the team was run by his sons Hank and Hal, who were like two halves of their dad: Hank was all bluster and impulsiveness, and Hal was thoughtful and practical. Hank was the one who bid against himself to give the now free agent Rodriguez a shiny new $275 contract to replace his terrible earlier deal. Rodriguez went on to lead the team to victory in the 2009 World Series and had several productive seasons until we found out he had been a steroid cheat pretty much the whole time. He was suspended for the 2014 season before returning. Hank Steinbrenner, meanwhile, has not been heard from since the ink dried on that contract. In any case, Rodriguez was the first player to clear $20M a year as well as the first player to clear $30M a year.

In the fifteen years since he signed that contract, baseball has evolved. The luxury taxes were joined by some revenue sharing among teams to help ease the burden on franchises in smaller markets. More and more teams were able to rely on local cable television money, a scenario which allowed the Los Angeles Dodgers to be sold for a previously unimaginable $2 billion dollars, but which also allowed smaller franchises like the Cincinnati Reds to retain their stars like Joey Votto and Brandon Phillips where in previous years they’d have ended up in Boston or Chicago or New York.

Every year the numbers get a little higher. The revenue is pouring in and now teams also get money from MLB’s strong digital platforms. New stadiums throughout the league boosted interest and attendance. And expanded playoffs gave more teams chances every season, spreading the wealth not only financially but also in fan interest. There are still some anomalies, like in 2013 when we saw Alex Rodriguez make more money than the entire roster of the rebuilding Houston Astros, but the rising economic tide in the sport has generally lifted most of the team’s boats. The players are entitled to get what they can; as they have a limited window to grab the money that any one of us would also try to maximize if we had the chance. My Baseball Essential colleague Josh Sadlock details that beautifully HERE.

More recently, we’ve seen Clayton Kershaw sign a contract extension for $215M, Jon Lester get $155M from the Chicago Cubs, and Max Scherzer defect from the Motor City to the nation’s capital for $210M. Just in the past couple of weeks, we’ve seen David Price get $217M from the Red Sox and Zack Greinke relocate to the Arizona desert for a record-breaking average annual value of $34.4M a year, a far cry from Nolan Ryan’s 1M average just thirty-six years ago. And those are just the bank-busting pitchers. Last year, an offensive generator named Giancarlo Stanton got $325M from the Marlins, a team which often pretends it can’t compete and then fulfills its own prophecy. And last offseason, even known (onetime?) steroid users Nelson Cruz ($57M) and Melky Cabrera ($42M) made more than enough to cover whatever they paid their suppliers. And of course, Jason Heyward just became one of very few top players to leave the St. Louis Cardinals when he signed with the Cubs for $184M over eight years.

Thanks to the record amounts of money coming into the game now after years of resistance by the owners even as they spent freely, the players are reaping more financial benefits now than they ever have. And the salaries have increased far higher than the rate of inflation has. That 1M annual salary that Nolan Ryan had in 1979 would be worth just under $3.5M today. This upcoming season, Ben Zobrist will earn that amount just by Memorial Day. Bryce Harper can expect a massive payday when he becomes a free agent in 2019, and it’s anyone’s guess how much he will get. He won’t starve, particularly if Hank Steinbrenner comes out of hiding to make him an offer. And if not a Steinbrenner, there will be another owner tossing out money. There always is.

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